Correlation Between European Wax and Transportadora
Can any of the company-specific risk be diversified away by investing in both European Wax and Transportadora at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining European Wax and Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Transportadora de Gas, you can compare the effects of market volatilities on European Wax and Transportadora and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in European Wax with a short position of Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Transportadora.
Diversification Opportunities for European Wax and Transportadora
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and Transportadora is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas and European Wax is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on European Wax Center are associated (or correlated) with Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of European Wax i.e., European Wax and Transportadora go up and down completely randomly.
Pair Corralation between European Wax and Transportadora
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Transportadora. In addition to that, European Wax is 1.6 times more volatile than Transportadora de Gas. It trades about -0.07 of its total potential returns per unit of risk. Transportadora de Gas is currently generating about 0.12 per unit of volatility. If you would invest 1,927 in Transportadora de Gas on September 25, 2024 and sell it today you would earn a total of 949.00 from holding Transportadora de Gas or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Transportadora de Gas
Performance |
| Timeline |
| European Wax Center |
| Transportadora de Gas |
European Wax and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Transportadora
The main advantage of trading using opposite European Wax and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Transportadora can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transportadora will offset losses from the drop in Transportadora's long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
| Transportadora vs. Eni SpA ADR | Transportadora vs. BP PLC ADR | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Suncor Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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